The trade finance programme (TFP) of the Asian Development Bank (ADB) will provide guarantees worth up to US$20 million a year to support trade in Viet Nam.
|Goods are loaded at a port for export. ADB and OCB have signed an agreement to support exporting and importing firms in Việt Nam.- Photo nongsantoancau.com
The ADB said in a news release on Wednesday that it had signed an agreement on support with the Orient Commercial Joint Stock Bank (OCB), which means the TFP now has 12 bank partnerships in Viet Nam.
"Under this agreement, ADB and OCB will support exporting and importing companies, including small- and medium-sized enterprises (SMEs)," Steven Beck, the head of trade finance at ADB, said. "This agreement will help create economic growth and jobs."
ADB said Viet Nam has consistently been one of the top five most active among 20 developing markets where the TFP operates.
The programme has conducted nearly 4,500 transactions, supporting over $6.9 billion in trade in Viet Nam. Of these, roughly 75 per cent were for trade financing for SMEs.
Viet Nam's economic growth has been increasing since 2012, with the gross domestic product (GDP) expanding 6.7 per cent in 2015 – its strongest in seven years. The growth has been propelled by a surge in foreign direct investment and export-oriented manufacturing.
However, at least 70 per cent of the country's GDP is generated in cities and serious development challenges remain to make growth more inclusive, according to ADB.
For instant, SMEs' access to trade finance remains limited with Việt Nam's banking sector not yet as developed as in other regional markets such as Malaysia, the Philippines or Thailand. As such, international banks either have limited or no appetite to take risks on Vietnamese banks.
Backed by ADB's AAA credit rating, the TFP provides guarantees and loans to over 200 partner banks to support trade, enabling more companies throughout Asia to engage in import and export activities.
Since 2009, the TFP has supported more than 8,000 SMEs across the region, with about 11,500 transactions valued at over $23.2 billion, in sectors ranging from commodities to capital goods, to medical supplies and consumer goods.